Rebar futures are on the rise in China

China's steel rebar futures were higher as production continued to decline in the country's major steel cities amid tackling winter air pollution.

The most active rebar contract on the Shanghai Futures Exchange climbed 0.6 percent to 3,794 yuan ($ 570.68) a tonne.

Capacity utilization at Chinese steel mills continues to fall, with blast furnaces hitting their lowest level since at least 2012 to 70.17 percent as of November 10.

“The production cuts have already caused a shortage in the supply of rebar products for a number of specifications in some regions,” said Bai Jing, an analyst at Galaxy Futures in Beijing.

China has pledged to tackle pollution and cut surpluses in its massive steel capacity. He closed steel mills in major cities, including Tangshan and Handan in the north, to cut production during the winter months.

“Steelmaking raw materials are supported by stronger steel prices,” Bai added. Iron ore on the Dalian Mercantile Exchange rose 1.3 percent to 466 yuan a tonne. Coking coal futures remained stable as steel mills had high coke inventories and no longer wanted to restock.

Iron ore for delivery to the Chinese port of Qingdao rose 0.4 percent to 62.6 tons last week.